3.4.8

Promotional Decisions 3

Test yourself

Promotional Mix

The promotional mix is the combination of different promotional methods that a business uses. For example, a business might advertise largely through TV, but also do some social media advertising and have sponsorship deals in place with athletes. Factors influencing the promotional mix are:

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Finance available

  • Some businesses will have much more finance (money) available to spend on promotions.
  • Some promotional methods (e.g. TV advertising) are more expensive than others.
  • Smaller businesses with less finance are less likely to be able to afford TV advertising.
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Competitor actions

  • The promotional mix of competitors might influence a business because they may want to reach consumers using the same channel as rivals.
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The nature of the product or service

  • The type of product (or service) will influence which promotional method needs to be used.
  • A technical product like a laptop may want to give consumers more information about their product, whilst a simple product like orange juice (Tropicana juice for example) may not need to give info.
  • A fashion label like Hugo Boss does not have much information to communicate. How their products look is more important.
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The nature of the market

  • As a market matures, the rate of growth changes.
    • If a market is growing slowly, advertising may be less important.
    • If a market is growing fast, then businesses will be battling for market share and are willing to spend more on advertising as it will affect sales by a larger amount.
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Target market

  • A business' target market for a product (or service) will affect the promotional method that they use because different types of people use different platforms more often.
  • A business wants to promote its product to its potential customers.
  • A business that produces women’s underwear will not usually want to promote their product to middle-aged men.

Reasons for Promotion

There are 4 main reasons why businesses use promotion:

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To inform/remind customers about the product

  • A business cannot sell a product (or service) if no consumers know about it.
  • Businesses must be able to inform their target market about their product (or service) and remind people, at the right time, in the hope that they will buy it.
  • Reminding customers at the right time is key. There is not much point in promoting Christmas baubles on the 26th December.
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To create or increase sales

  • Informing consumers that are not aware of a business’ products can ‘create’ new sales.
  • By constantly reminding existing customers about a product (or service) and its benefits, businesses can increase the sales from each customer.
  • This is more likely to happen during the periods before short “sales windows” like Easter and Christmas.
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To create or change the image of a product (or service)

  • A promotion can have a large impact on how customers see a product. If a celebrity uses the product, a business can give the product a fun, luxury or innovative image.
  • UnderArmour sponsored golfers like Jordan Spieth to create a youthful and cool image after they launched their golf and sporting wear ranges.
  • A promotion can help to change customers’ perception of a product.
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To persuade customers to buy the product

  • Promotions are often used to advertise the benefits of using a product and to explain why you should buy it.
  • These are attempts to persuade the customer that this is the best product for them.

Jump to other topics

1What is Business?

2Managers, Leadership & Decision Making

3Decision Making to Improve Marketing Performance

4Decision Making to Improve Operational Performance

5Decision Making to Improve Financial Performance

6Improving Human Resource Performance

7Analysing the Strategic Position of a Business

8Choosing Strategic Direction

9How to Pursue Strategies

10Managing Strategic Change

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